When you think of that term, your mind might jump to the concept of “growth hacking” (ew) or marketing.
But building a growth strategy encompasses more than just customer acquisition.
They may be the primary responsibility of the growth team, but the best growth strategies are rooted in data and built with the involvement of product, customer success, marketing, the leadership team, finance, supply chain, and engineering.
In this article, we’ll go over what a growth strategy is, look at examples of strategies in some of the world’s top companies, and learn about the steps to develop a strategy.
I hope you have your party pants on because we’re about to drop some knowledge.
What is a Growth Strategy?
A growth strategy is a data-driven experimental model that is used to help make decisions that will improve customer acquisition and retention -- thereby increasing revenue and market share.
That’s the dry definition.
The more fun definition:
A growth strategy is the playbook you use to grow your business, make more money, and develop a customer base of raving fans.
These aren’t the sole domain of the marketing team; in fact, many strategic growth initiatives have nothing to do with marketing.
For example, there are many elements that might make it into a growth strategy that land on other functional teams:
- Launching into new product categories (product team)
- Establishing a presence in a new market (leadership)
- Developing partnerships with micro-influencers or complementary brands (marketing)
- Optimizing the onsite conversion funnel (engineering).
If you want to run a successful business and see your revenue grow, you need to take your growth strategy seriously.
The 4 Primary Growth Strategy Types
There are four major models of growth strategies that companies use to gain more market share and grow revenue.
- Market Penetration - this strategy is used to grow your market share for a product. You can increase your pajama sales by offering specials, discounts, advertising campaigns, and celebrity endorsements to compete with competitors in your category.
- Market Development - focuses on expanding into new user segments that you did not target previously, underrepresented segments, and repeat customers. Besides selling pajamas for kids, you can start making pajamas for adults too.
- Product Development - this is all about creating new products to solve consumer needs that are not currently being addressed. Maybe you’ve noticed a demand for bedroom decor, you can launch a new bedding collection.
- Diversification - an easy way to think of this is to expand into an entirely new product category. Grow your business beyond clothing and create an app to help users fall asleep at night.
Most companies will build more than one model into their overall strategy as they experiment and download learnings from the data collected in those experiments.
Examples From The World’s Fastest Growing Companies
Below are some examples of how some of the world’s biggest companies leveraged these growth strategies to become the massive companies they are today.
There’s much to learn from observing how others have utilized these growth strategies. It can help you think of ways to apply them to your own business.
Market Development was one of the strategies Shopify used during their early days for growth.
The company realized that when they built integrations and partnerships with companies that had a similar small business demographic but were not direct competitors, they gained more exposure to potential customers.
They doubled down on this strategy and built an entire Shopify Partnership ecosystem to make integration with small businesses easier. Shopify now has over 20,000 partnerships and growing.
Disney is a great example of Diversification.
Even though Disney started off as a film and animation company, it no longer relies on movies as its sole source of revenue.
Disney has expanded its product categories to offer theme parks, cruise ships, merchandising, and more. Disney has managed to become an entire entertainment experience beyond the cinema.
Whitney Wolfe Herd, founder of the dating app Bumble, used Product Development as her growth strategy.
She noticed that dating apps were being dominated by men and she wanted to give women a seat at the table.
So she created a dating app that enabled women to make the first move. Bumble is now the second most popular dating app with over 42 million users.
Under Armour has a lot of fierce competition from sportswear giants like Nike and Adidas. Utilizing the market penetration strategy, Under Armour was able to see massive growth by signing an endorsement deal with NBA superstar Stephen Curry.
Suddenly all the Stephen Curry fans want to wear Under Armour gear too.
Yes, these examples are from massive companies with huge budgets that may seem incredibly unattainable right now -- even if you work with a VC-backed startup. But they started somewhere, and they started with a growth strategy as solid as your ex wishes his abs were.
So now that you’re familiar with these strategies, how do you put them into action to build your own strategy?
Steps to Develop a Growth Strategy
There are a few things you can do to help you design an innovative growth strategy for your own business.
1. Get Curious
There’s an old saying that goes “curiosity killed the cat”, but in growth marketing curiosity just might save your business!
Make sure that you take the time to get to know your customers.
One way you can do this is by having customer interviews. Talk to your customers! Find out what they want.
- What are their pain points?
- Do people really need what you’re offering?
- What are your target customers’ goals, motivations?
Curiosity can never fail you. Try to get inside the heads of your customers (in a non-stalkery way) and see how your business can help solve their problem.
2. Run Growth Experiments
What SEO strategy are you going to use to ensure that people can find your products online? Should you use email funnels to nurture your customers?
Once you have some insights from your customer interviews, you’ll be able to identify growth opportunities in your business.
Now you can start building your strategy around those insights.
You won’t always have definite answers to these questions, but by running experiments you’ll be able to validate your findings.
It’s best to keep your experiments lean and go after the low hanging fruit - try to prioritize experiments that will have the maximum impact for the lowest cost.
3. Take Care of Your People
Retention is one of the most important metrics for growth. This includes customer retention and employee retention.
Taking care of your existing customer comes as no surprise to most people. You treat customers nicely if you want them to support your business, but it’s often employees that get overlooked.
If you manage employees you want to make sure that your team is getting the support, resources, and energy they need to be successful at their jobs. Happy employees create happy customers and a thriving business!
Now You Can Put it All Together
Keep in mind that these growth strategies are not exclusive to one another. You can use one or a combination of these strategies. Do whatever makes the most sense for your business.
The most important thing to remember is to listen to your customers.
I hope these insights will help you build your growth strategy, decide where to start and kick off your first experiment.
If you would like to see a replay of our Growth Strategy webinar, you can watch it here: